Xbox CEO Asha Sharma has revealed that the company is undergoing a significant strategic "reset," acknowledging that key initiatives, including the Xbox Game Pass subscription service, have not yielded the expected growth.
In a memo outlining the dramatic shakeup, Sharma stated that the Xbox business is "not healthy," attributing the current situation partly to "big bets that have not paid off." These bets included the expansion of Xbox Game Pass, releasing more titles on competing platforms, and investing in a "broader portfolio of content." While these efforts did generate "meaningful value," they "did not grow at the pace we expected" for a publicly traded company focused on continuous growth. This slower-than-anticipated growth in new ventures led to a weakening of the core business, prompting further investment in hopes of a turnaround, a strategy that Sharma now deems unsustainable in the face of the industry's current hardware crisis.
Launched in 2017, Xbox Game Pass was designed as a Netflix-like service, offering subscribers access to all first-party Xbox games and a curated selection of other titles for a monthly fee. The service has achieved popularity, reaching over 34 million subscribers. However, its long-term viability has been a subject of debate among industry observers. Take-Two CEO Strauss Zelnick, for instance, has previously argued that launching new games directly into subscription services, as Microsoft does, is not a sound strategy.
Microsoft's approach to Game Pass has seen notable shifts. In 2025, the price of Xbox Game Pass Ultimate was controversially increased by 50% to $30 per month, a move that reportedly led to a significant subscriber reduction. Microsoft subsequently lowered the price to $23 per month. More recently, the company announced that new Call of Duty titles would no longer be included with the service at launch, signaling a potential redefinition of the subscription's value proposition. While the current price of Game Pass Ultimate remains higher than it was a year prior, Sharma's direct acknowledgment of Game Pass as a bet that "did not fully pan out" suggests further changes to the service could be implemented in the future, though no specifics were provided.
Regarding Microsoft's strategy of releasing games on rival platforms, Sharma has already begun to retreat from this approach. The company is returning to a model of situational exclusives, with upcoming titles like Gears of War: E-Day and Clockwork Revolution set to be exclusive to the Xbox platform. An industry expert characterized these exclusives as games "being sent out to die" due to their placement on a less dominant platform.
Sharma also addressed the investment in a "broader portfolio of content" as a bet that did not pay off, indicating a shift in focus towards "higher priority projects" with a greater likelihood of success. Despite these strategic adjustments, no announced first-party Xbox games have been canceled as part of this ongoing reset.